JOHANNESBURG - Finance Minister, Malusi Gigaba lauded state-owned enterprises for playing a leading role in country's infrastructure and crediting their infrastructural developments for sustaining the South African economy.
The Minister highlighted what he called the "critical advancement of black professionals," many of whom he said, have gone on to play leading roles in the private sector. He also made mention of the new boards appointed at both the SABC and SAA, stating that both entities now have trusted and capable boards that will guide the institutions to "healthy and sustainable operating states."
Referencing to Eskom, Transnet, and SAA, the Minister said the government had begun using these entities "strategically," by incorporating localisation and preferential procurement into their operation philosophy and investment plans. He said, "challenges" within SOE's obscured the "success and progress" evident at "stable and self-sustaining" SOE's such as the Development Bank and the Land Bank.
''Eskom is critical to our development, with the link between electricity, infrastructure, and economic growth being well established. He added that the economic growth, which was previously curbed by constraints has since been resolved. Speaking on the issue of surplus supply, the Minister said that this was a better problem to have; adding that Eskom was addressing the issue by growing demand and increasing exports to neighbouring countries.
The energy mix going forward and sequencing of adding new generating capacity will be informed by the updated integrated resource plan. The Minister further echoed President Zuma's nuclear energy plan, that the nuclear program will be implimented at a pace and scale that the country can afford.
The Minister maintained that Eskom has to be assisted in order to create its own revenue stream; granting a tariff hike would represent a step-change in Eskom’s future revenues, Treasury said in its Medium-term Budget Policy Statement.
A team from national treasury will work closely with the department of public enterprises to address governance and financial mismanagement issues at Eskom and revert their findings to government. The Minister stated that government was "tired" of being "dragged" into crisis by those employed to govern SOE's, further adding that the trend of SOE's seeking government bailouts "must end."
The Minister came out in strong defense of SAA, justifying government's plan to sell Telkom shares in order to recapatalise the airline. He emphasized the importance of SAA's positioning, which grants the airline independence from relying exclusively on the profit and scheduling consideration of global airlines. "SAA sells South-Africa's economy, tourism and culture to every one of its passengers," the minister said. Further adding that global airlines would not perform this "priceless" marketing role for the country.
The Minister reiterated SARS' assertion of being "sensitive" to the challenges of taxpayers, "SARS is also aware of the problem of illicit financial flaws, it is working closely with [Financial Intelligence Centre] FIC and the South African Reserve Bank to close gaps which are currently arbitraged."
He further called for the capacity of SARS to combat cybercrime to drastically enhance. He added that such information would give SARS insights into South African's foreign national accounts, and announced that data verification without treaty partners is currently underway. This he says will give SARS insights into risk areas of multi-national enterprises; the process is set to begin at the end of 2017, with the first exchanges beginning next year.
The Minister applauded governments effort of establishing a trend of appointing black accounting firms as external and internal auditors with contracts worth tens of millions in annual revenue. In addition to the revenue, this makes it more difficult for large private sector companies to exclude them on the basis of them not proving their abilities to service large complex enterprises. This the minister says is an illustration of the developmental impact of state-owned companies, if leveraged strategically.
"Government can manage SOE's well and will act decisively to stabilize those which are experiencing challenges," he said. "The public and indeed government as a shareholder, are correct in expecting a lot of them.
- BUSINESS REPORT ONLINE